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Oil falls as Saudi, Russian output rises

Posted on Thursday, July 05, 2018 by Mercedes Poole

Crude Oil

So when President Donald Trumptweeted that he'd spoken with Saudi Arabia's King Salman, asking him to raise their oil production by two million barrels per day, and that they'd agreed - it raised some eyebrows.

US crude oil production stagnated for the first week in many months, reaching 10.9 million bpd in the week ending June 22, holding steady for three weeks in a row, according to the EIA.

"In the near-term, the level of OPEC production - deployment of spare capacity by Saudi Arabia, Iraq, UAE, Kuwait (and ex-OPEC by Russia), and involuntary disruptions in Libya, Venezuela, Iran - are more important drivers of crude prices", Goldman Sachs said in a note published late on Monday. "REDUCE PRICING NOW!" Trump wrote on Twitter.

Mr Zangeneh said that any increase in the production by any OPEC member country "beyond commitments stipulated in OPEC's decisions adopted in 171st and 174th Meetings would constitute a breach of the agreement".

The U.S. bank warned that supply threats were "threatening a sharp further rise in prices and global economic growth".

Traders in Asia are trying to gauge which way it will go when state-owned Saudi Arabian Oil Co., known as Saudi Aramco, publishes monthly official selling prices this week. Republican presidents, especially George H.W. Bush and his son, used diplomatic channels with Saudi Arabia, the world's biggest exporter which pumps nearly one-third of OPEC's output.

The Trump administration has been counting on Saudi Arabia and other OPEC members to supply enough oil to offset the lost Iranian exports and prevent oil prices from rising sharply. "Since Venezuela and Libya failed to produce, OPEC countries chose to increase their output by one million barrels to compensate", Sonatrach's CEO noted, adding: "This is why prices stand at the same level".

Ardebili also noted that Trump is impolite in his rhetoric, and Middle Eastern producers never respond in the U.S. president's style.

"Although geopolitical risk factors ranging from suspended oil exports from Libya, falling production in Venezuela and United States sanctions on Iran have supported oil, the oversupply concerns could make a return". Mazrouei, who serves this year as OPEC's president, said the U.A.E.is ready to help ease any supply shortages in cooperation with OPEC.

"Falling production from Venezuela and an expected decline in supply from Iran after U.S. sanctions have fueled speculation of tighter global supply". The U.S. market will not have a settlement price due to the U.S. Independence Day holiday. He also called on the United States to join world powers in a meeting with Iran in Vienna on Friday.

"As Libyan port closures remove about three-quarters of their 1 million barrel-per-day exports, crude is pushing higher again today", he said.

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